Suit No.1731 of 2009
Date of hearing : 25.02.2012.
Plaintiff : Jahangir Siddiqui.
Defendants : Noman Abid Investment
Management Limited & others.
3.C.MA. No. 10054/2010.
4. For Settlement of Issues
Mr. Khalid Javed Khan, Advocate for the plaintiff.
M/s. Muhammad Anwar Tariq & Mr. Obaidur Rehman, Advocates for the defendants No.1 & 2.
Mr.Ijaz Shirazi Advocate for the defendant No.3
Muhammad Ali Mazhar, J.:- By this order, I intend to dispose of CMA No.10987/2009 filed by the plaintiff under Order 39 Rules 1 & 2, CPC read with Section 151, CPC and CMA No.78/2010 filed by the defendants No.1 & 2 under Order 7 Rule 11, CPC.
2. The plaintiff has filed this suit for declaration, recovery and damages with the following prayers:-
a) Declare that the plaintiff was entitled to redemption of 466,343.0867 Units of RIF within six working days of the request of redemption and the defendant No.1 is liable to pay the plaintiff NAV of Units at the rate as on 22.10.2008.
b) Declare that failure of the defendant No.1 to redeem the units of the plaintiff as per his request as NAV as on 22.10.2008 is illegal, malicious, fraudulent and in contravention of the provisions of law.
c) Pass judgment and decree against the defendants No.1, 2 and 3 jointly and severally for an amount of Rs.24,233,917/- in favour of the plaintiff being the redemption amount of the Units and mark up @ 18 % w.e.f.30.10.2008 till the date of payment.
d) Award a sum of Rs.20 Million to the plaintiff by way of compensation/ damages against the defendant No.1.
e) Direct the defendant No.4 to initiate appropriate proceedings against the defendant No.1 and take strict penal action against the defendant No.1, its Chief Executive, Directors, officers etc. in accordance with law.
f) Direct the defendants No.1 to 3 to deposit the sum of Rs.24,233,917/- along with mark up @ 18 % w.e.f. 30.10.2009 till date with the Nazir of the Court during the pendency of the case.
g) Prohibit the defendant No.1 from receiving any further investment in the Units of RIF i.e. defendant No.2 till the payment of Rs.24,233,917/- with mark up is made to the plaintiff.
h) Grant such relief which may be deemed fit and proper in the circumstances of the case.
i) Grant costs of the suit.
3. Brief facts as narrated in the plaint are that the plaintiff is a businessman and the defendant No.1 is a Non-Banking Finance Company (NBFC) under license from the defendant No.4, to function/operate as an Asset Management Company. The defendant No.1 is managing the defendant No.2 i.e. Reliance Income Fund (RIF). The plaintiff made investment in RIF and purchased 466,343.0867 Units of RIF on 27.06.2008 and the plaintiff was allocated Account No.146 by defendant No.1. The plaintiff submitted his request for redemption of above Units on 22.10.2008 and under Regulation 66 (5) of the NBFC Regulations 2007, which was in field when the plaintiff’s redemption request was submitted, the defendant No.1 was liable to redeem the Units and make payment within a period of six working days of the request for redemption by the plaintiff as a Unit Holder. The NBFC Regulations, 2007 were repealed and substituted by the NBFC Regulations, 2008 in which also, the defendant No.1 was liable to redeem the Units and make payment within a period of six working days at a prevalent Net Asset Value (NAV), however instead of discharging its statutory obligation by making payment within the stipulated period, the defendant No.1 vide letter dated 30.10.2008 informed the plaintiff that they have come to know that the plaintiff has withdrawn his request for redemption of Units and the defendant No.1 would treat the request as cancelled, which letter was completely false, fabricated and misleading as the plaintiff never agreed to withdraw the redemption request. The plaintiff replied the letter on 31.10.2008 and clearly stated that there was no withdrawal of the request. Vide letter dated 31.01.2008, the defendant No.1 informed that it was under tremendous pressure for redemption of Units from different Unit Holders and requested the plaintiff to get redeemed 50 per cent Units immediately and the remaining Units would be redeemed within two weeks. The defendant No.1 requested for bifurcation of the plaintiff’s redemption request into two portions to which the plaintiff reluctantly agreed, however the plaintiff clearly informed the defendant No.1 that he is ready to accept redemption payment in two installments as indicated above, the NAV of all the units should be on the rate existed at the time of initial request of redemption. The plaintiff sent two blank undated redemption forms for redemption but the defendant No.1 once again defaulted in redeeming the Units as per its commitment.
4. The plaintiff has filed application under Order 39 Rules 1 & 2, CPC whereas the defendant No.1 & 2 have filed application under Order 7 Rule 11 C.P.C for rejection of plaint or in alternate return the plaint under Order 7 Rule 10 C.P.C. Since, the defendant No.1 & 2 claimed the rejection of plaint, hence, I would like to take-up and decide CMA No.78/2010 first.
5. The defendant No.1 & 2 in their application under Order 7 Rule 11, CPC pleaded that the dispute pertains to “Mutual Funds” and its redemption which is exclusively to be dealt with by defendant No.4, hence this court has no jurisdiction to entertain the suit. The defendant No.4 denied the relief to the plaintiff in its order that on the basis of available information the matter cannot be concluded, meaning thereby that the claim of the plaintiffs lacks evidence.
6. Although no counter affidavit has been filed by the plaintiff to the CMA No.78/2010, however, the learned counsel for the plaintiff requested that the averments made in the plaint may be considered for deciding the instant application.
7. The learned counsel for the defendant No.1 & 2 argued that the matter of redemption of units is highly technical in nature and this matter falls squarely within the powers and ambit of Securities Exchange Commission of Pakistan. He further argued that in the light of SECP’s Notification bearing No. 1061 (1)/2005 dated 18.10.2005, various powers including those listed below emerging from Companies Ordinance 1984 have been delegated to the Executive Director (NBFCs Department). The relevant Sections of Companies Ordinance 1984 relied upon by the learned counsel of defendant No.1 & 2 are as under:
Section of Companies Ordinance 1984
Nature of Power/Function
Section 282D (1)
To issue direction to NBFCs.
Section 282D (2)
To modify or cancel the directions issue and impose conditions.
Section 282H (1)
To monitor financial position of an NBFC and to order special audit.
To cause inquiry or inspection and to exercise other related powers.
Impose fine on the NBFC and its officers (including auditors).
Cancellation of Licence
8. He further argued that right of appeal under Section 33 of Securities & Exchange Commission of Pakistan Act, 1997 was available to the plaintiff in the special jurisdiction which the plaintiff failed to avail and he rushed to this court seeking relief’s on the disputed claim raised by him. Lastly, it was contended that this court has no jurisdiction to entertain and adjudicate the suit and the plaint is liable to be rejected. In support of his arguments, the learned counsel for the defendant No.1 & 2 referred to following case law:
1. 2009 SCMR 1392 (Securities and Exchange Commission of Pakistan v. Mian Nisar Elahi). In this matter, the honourable Supreme Court held that before approaching High Court the respondents should have exercised alternate remedies available under sections 33 and 34 of the Act. The dispute is highly technical in nature and can amicably be resolved only through special expertise, High Court itself observed that "the SECP would be more appropriate forum, to pass such interim order". The very object of the Act would be frustrated, if for one reason or the other, the initial orders of the SECP are directly challenged before the High Court.
2. PLD 2001 Karachi 256 (National Accountability Bureau v. Zahida Sattar). In this matter, it was held that assumption of jurisdiction by the learned Single Judge specifically militates against the Scheme of the Ordinance which provides for a procedure whereby Accountability courts have been established throughout the country to bring corrupt persons to book and the moneys which they have made unlawfully recovered, for the general good of the country. Such a procedure essentially contemplates the eradication of corruption and corrupt practices and as provided in section 12 of the Ordinance gives the power to the Chairman of the National Accountability Bureau or the Accountability Court to freeze the property of any person being tried for an offence before it.
3. PLD 1969 SC 187 (Adnan Afzal v. Capt. Sher Afzal). In this matter, it was held that a comparison of these provisions thus indicates that the provisions of the West Pakistan Family Courts Act are of a more beneficial nature which enlarge not only the scope of the enquiry but also vest the court with powers of giving greater relief with a right of appeal either to the District Court or to the High Court. Furthermore, the combined effect of sections 5 and 20 of the Act is clearly to give exclusive jurisdiction to the Family Courts.
4. 2009 CLD 1537 (Fouzia Begum v. Govt. of Pakistan through Secretary, Ministry of Finance, Islamabad). In this case, it was held that as far as second prayer for direction to NAB for holding of any inquiry against respondents Nos.4 and 5 is concerned SECP which is Regulatory Body of respondent No.7 has already seized of the matter which after holding the inquiry has removed certain, irregularities and in order to safeguard the interest of the depositors has arranged the sale of bank in open bidding whereupon respondent No.9 has purchased the bank on 26-6-2007. It is felt appropriate that the bank should continue to work in order to revive the confidence of general public in the bank. In such circumstances if any direction is issued to respondent No.8/NAB it will not only hamper the progress and the working of the bank but it will also ruin the business of bank as confidence of general public will be shaken.
5. PLD 2002 SC 408 (Mst. Zahida Sattar v. Federation of Pakistan). In this case, it was held that the question arises whether a Civil Court is vested with the jurisdiction to entertain a suit to try an issue which is subject-matter of a criminal charge for which an accused is being tried in a Criminal Court under special law i.e. NAB Ordinance. The answer: to this question revolves around the decision on the question whether the Civil Court can try a criminal charge which is exclusively triable by a criminal Court under the special law. The answer cannot be, but in the negative. In a case where accused holder of public office is being tried for accumulation of wealth acquired by him by illegal and corrupt practices by misusing his official capacity in the name of his spouses and other relatives, the dispute is not of a civil nature between two private parties.
6. 2003 CLD 1185 (M. Waqar Monnoo, Member Central Managing Committee v. All Pakistan Textile Mills Association through C.E.O). In this case, it was held that the contention that the plaint cannot be rejected in part under Order VII, rule 11, C.P.C. is not material as a perusal of the prayer clauses show that all of them are hit by section 12 ibid and section 32 ibid; the question of rejecting the plaint in part does not arise as in the present form the plaintiff is seeking relief’s which are dependent on and connected with each other.
7. PLD 1997 Peshawar 72 (Qayyum Nawaz Khan v. Regional Manager, Agricultural Development Bank of Pakistan, Dera Ismail Khan). In this case it was held that the trial court on the one hand came to the conclusion that he has got no jurisdiction and returned the plaint under Order 7 Rule 10, C.P.C. for presentation before the proper forum, but at the same time allowed the appellants to amend their plaint. The dispute between the parties relates to the recovery of Advance and the Banking Tribunal has the exclusive jurisdiction, therefore, the learned trial court was right in returning the plaint to the appellants under Order 7, Rule 10, C.P.C. for presentation before the proper forum.
9. On the other hand, the learned counsel for the plaintiff argued that the plaintiff made an investment in RIF (Reliance Income Fund) and purchased units from Defendant No.1 on 27.6.2008. He further argued that under Rule 57 (4) of the NBFC & National Entities, Regulations, 2008, the Defendant No.1 was liable to redeem the units and make payment within a period of six working days of the request for redemption by the unit holder. He further argued that the defendant No.1 has not referred to any provision of either the Act, 1997 or Ordinance, 1984 which provides any specific remedy to the plaintiff for redemption of amount nor any provision barring jurisdiction of this court. So far as contention of defendant No.1 that letter dated 25.8.2009 was an order appealable under Section 33 of the Act, 1997, the learned counsel for the plaintiff contended that the defendant No.1 has failed to show under what provision of law this order was passed in the first instance, secondly, it must show that it was such an order which could be appealed against. He further argued that Section 33 of the Act, 1997 provides appeals against orders passed by the Commission/Commissioner. By no stretch of imagination, the letter dated 25.8.2009 can be treated as an order passed by Commission or the Commissioner. An order must decide or dispose of the case and not merely advise the party to amicably settle the matter or approach the appropriate forum. The defendant No.1 has also failed to point out as to what was the forum under the law which the plaintiff was required to approach. He further contended that where rights are exclusively created by statute and specific remedies are also provided under that statute only then jurisdiction of civil court could be ousted and that too when the order is passed in accordance with law and in good faith, otherwise, the jurisdiction of civil court is never ousted. He further submitted that all the powers delegated to Executive Director under SRO 1061(1)/2005 are relatable to executive functions and not powers of adjudication which may be the subject matter of appeal under Section 33. In support of his arguments, the learned counsel relied upon the following case law:
1. PLD 1997 SC 3 (Abbasia Cooperative Bank (Now Punjab Provincial Cooperative Bank Ltd. V. Hakeem Hafiz Muhammad Ghaus). In this case, the honorable Supreme Court held that civil courts under S.9, C.P.C. were competent to try all suits of civil nature except those which were ousted from their jurisdiction either expressly or by necessary implication. Provisions contained in statute ousting Jurisdiction of courts of general jurisdiction should be construed very strictly and unless case fell within letter and spirit of barring section, no effect should be given thereto. Where jurisdiction of civil courts to examine validity of any action or order of Executive Authority or Special-Tribunal was challenged on ground of ouster of jurisdiction of civil court, it must be shown; that Authority or Tribunal was validly constituted under the Act; that order passed or action taken by Authority of Tribunal was not mala fide; that order passed or action taken was such which could be passed or taken under law which conferred exclusive jurisdiction on Authority or Tribunal; and that in passing order or taking action, principles of natural justice were not violated. Unless all such conditions were satisfied, order or action of Authority or Tribunal would not be immune from being challenged before civil court. Where, therefore, Authority or Tribunal had acted in violation of provisions of Statutes which conferred jurisdiction on them or such action or order was made in excess or in absence of jurisdiction or mala fide or was passed in violation of principles of natural justice, such order could be challenged before civil court in spite of provision in Statute barring jurisdiction of civil court.
2. PLD 1968 Karachi 797 (Amin Cotton Company v. Karachi Cotton Association Ltd.). In this case, learned single judge of this court held that when rights created by a statute are required by statute to be adjudicated only by a Tribunal to be set up under that statute, then the civil courts have no jurisdiction to grant relief. But where, a statute confers exclusive jurisdiction on a tribunal for determining claims in respect of common law rights, then the jurisdiction of the courts will not be excluded until the tribunal required by the statute is set up.
3. 1986 CLC 2561 (Shah Muhammad v. Mst. Resham Bibi). In this case, learned single judge of this court held that although one of allegations in plaint was action of Martial Law Authorities against plaintiff on basis of which land was transferred to defendants, and such action was described to be mala fide and without lawful authority, yet no relief was claimed in suit to declare orders of Martial Law Authorities as without lawful authority. Defendant making application for rejection of plaint. Only appropriate course for trial court, held, was to frame issue with regard to jurisdiction of court on base of averments made in application for rejection of plaint, and after allowing parties to lead evidence thereon should have considered question of jurisdiction of court.
4. 2006 PTD 219 (Collectorate of Central Excise Karachi v. Syed Muzakkar Hussain). In this judgment, learned divisional bench of this court held that jurisdiction of civil court, invoking of, even where barred by statute. Suit for declaration and permanent injunction was filed by the respondent in order to challenge the notices issued to him by the Authority for the deposit of excise duty in respect of excisable services which were provided. High Court (Single Judge) decreed the suit. Appeal was filed by the Authority against the decision of the Single Judge. Contention of the Appellant/Authority was that the suit was not maintainable as the jurisdiction of the court was barred under S.40 of the Central Excise Act, 1944, and secondly, even if the plaintiff had felt aggrieved by the notices, then the remedy available to him was under the hierarchy of the Central Excise Act, 1944 itself and the same could not have been questioned by filing a suit. Plaintiff had not filed the suit calling in question any order passed under the Act or questioned any assessment or levy or collection of any duty under it, but had only questioned the notice issued by the Authority on the ground that the same had been issued mala fide without any jurisdiction or lawful authority. When special law provided hierarchy for redress of grievance, then one could not normally be allowed to circumvent the same by invoking jurisdiction of civil court, however, if prima facie any mala fide could be shown on the part of the authority, or illegality, which was floating on the surface, and or absence of jurisdiction, then the jurisdiction of civil court could be invoked in the matter. Plea as to bar of jurisdiction could only by sustained if it could be shown that the impugned order was passed in the bona fide exercise of powers under the statute. When it was established that the very act questioned was without lawful authority and jurisdiction, then instead of asking a party to go under the agony of lengthy departmental proceedings where possibility of getting relief were limited, civil court could grant relief to deserving party by holding that the act was without lawful authority. Jurisdiction of civil court can be excluded by the Legislature by special Acts which deal with the special subject but the statutory provision must expressly provide for such exclusion or must necessarily and inevitably lead to such inference. Bar created by the relevant provision of statute excluding jurisdiction of civil court cannot operate in cases, where the plea before the civil court goes to the root of the matter and would, if upheld, lead to conclusion that the impugned order is nullity. Even where the jurisdiction of civil court is barred and conferred upon special Tribunal, civil court being court of ultimate jurisdiction will have the power to examine the acts of such forums to see whether their acts are in accordance with law or are illegal or even mala fide.
5. PLD 2009 Karachi 38 (Attaullah v. Sanaullah). In this matter, learned single judge of this court held that plaint could only be rejected under Cl. (d) of Order VII, R.11, C.P.C. if from the statement in the plaint court came to the conclusion that the same was barred by any law. For deciding an application under O. VII, R.11, C.P.C. the contents of the plaint had to be taken as true on its face value and the pleas raised in defence could not be looked into. Jurisdiction of civil courts is ousted only in cases where statutory functionaries have jurisdiction to entertain, adjudicate and dispose of or determine any matter, under Cooperative Societies Act, 1925. If dispute is of such nature that the same cannot be referred to arbitration under S.54 of Cooperative Societies Act, 1925, for adjudication and decision, then S.70-A of Cooperative Societies Act, 1925, would not bar jurisdiction of Civil Courts.
10. The crux of the arguments advanced by learned counsel for the defendant No.1 & 2 that lis pertains to mutual funds, therefore, matter relating to mutual funds can be dealt with exclusively by the defendant No.4, which is Securities and Exchange Commission of Pakistan. The learned counsel further argued that instead of filing present suit in this court, remedy was available to the plaintiff to file appeal under Section 33 of the Securities and Exchange Commission of Pakistan Act, 1997 which enjoys special jurisdiction which has not been availed by the plaintiff. The learned counsel made much emphasis on the Notification issued by Securities and Exchange Commission of Pakistan on 18th October, 2005, SRO No. 1061(1)/2005 which was issued in exercise of powers conferred by Section 10 of the Securities and Exchange Commission of Pakistan Act, 1997, whereby several powers provided under numerous sections of Companies Ordinance, 1984 were delegated to its Commissioners and Officers. Paragraph No.4 of the aforesaid Notification mentions powers vested in the Executive Director, NBFC. The powers to deal the Sections 282 D(1), 282 D(2), 282 H(1) and 282I and 282J(2) have been granted to the Executive Director who can deal and exercise aforesaid powers and decide the matter accordingly. The sections reproduced hereinabove shows that section 282D pertains to the powers of Commission to issue directions to NBFC. Section 282H provides that Commission shall monitor general financial condition of NBFC and at its discretion may order special audit and an Auditor to carry out detailed scrutiny of the affairs of NBFC. Section 282I gives powers to the Commission to cause enquiry or inspection to be made by any person appointed in this behalf into the affairs of the NBFC. Section 282J is related to the penalty in case NBFC fails or refuses to comply with any provisions contained in part- VIII of the Companies Ordinance, 1984 or any of the provisions or rules or regulations made under Section 282B or regulations, circulars or directives or any directions or order passed by the Commission and sub-section 2 of the same section pertains to issuance of show-cause notice in case of contravention of any provisions of the Ordinance or rules or regulations or non compliance of any directions given or order passed by the Commission, while sub-section 3 of Section 282J pertains to cancellation of license of Non-Banking Finance Companies.
11. According to the learned counsel, the Executive Director passed the order against which the plaintiff should have availed the remedy of appeal under Section 33 of the Securities and Exchange Commission of Pakistan Act, 1997. For the convenience and ready reference, Section 33 of the Securities and Exchange Commission of Pakistan Act, 1997 is reproduced as under:-
33. Appeal to the Appellate Bench of the Commission.- [(1) Except as otherwise provided any person aggrieved by an order of the Commission passed by one Commissioner or an officer authorized in this behalf by the Commission, may within thirty days of the order, prefer an appeal to an Appellate Bench of the Commission constituted under sub-section (2)
Provided that no appeal shall lie against ----
(a) an administrative direction given by a Commissioner or an officer of the Commission;
(b) an order passed in exercise of the powers of revision or review;
(c) a sanction provided or decision made by a Commissioner or an officer of the Commission to commence legal proceedings [ ]; and
(d) an interim order which does not dispose of the entire matter.]
(2) The Commission shall constitute an Appellate Bench of the Commission comprising not less than two Commissioners to hear appeals under sub-section (1).
(3) If any Commissioner who is included in the Appellate Bench has participated or been concerned in the decision being appealed against the Chairman shall nominate another Commissioner to sit in the Bench to hear that appeal.
(4) The form in which an appeal is to be filed and the fees to be paid therefor and other related matters shall be prescribed by rules.
12. Section 33 reproduced above makes it clear that the appeal lies to the appellate bench of the Commission against an order of the Commission passed by Commissioner or an Officer authorized in this behalf by the Commission. However, clause (a) of the proviso attached to sub-section (1) of Section 33 of Securities and Exchange Commission of Pakistan Act, 1997 clearly provides that no appeal shall lie against an administrative directions given by the Commissioner or an Officer of the Commission. The plaintiff has attached copy of representation dated 8th August, 2009 which was written to the Executive Director, Securities and Exchange Commission of Pakistan, in which after mentioning entire grievances it was requested to the Commission to look into the matter and direct the defendant No.1 to make payment to the plaintiff along with compensation. However, vide letter dated 25th August, 2009, the Executive Director of Securities and Exchange Commission of Pakistan, Specialized Companies Division informed the plaintiff as under:
“Mr. Jahangir Siddiqui,
7/F, The Forum Block-9,
SUBJECT: Complaint for Non-Payment of Redemption Money for units of Reliance Income Fund by Noman Abid Investment Management Limited (NAIML)
This is with reference to your letters dated June 22, 2009, August 06, 2009 and August 08, 2009 on the above subject.
We had taken up the matter with Noman Abid Investment Management Limited and a copy of the letters (dated July 09.2009 and August 18, 2009) received from NAIML in this respect, is attached herewith for your information and record.
After going through the correspondence received from both side, it emerges that the redemption of units was delayed/ withheld due to some commitment/ understanding (as per NAIML) between NAIML and your office. Since this understanding between both the parties was not recorded/documented, we therefore cannot conclude this matter on the basis of available information.
You are therefore advised to arrive at some amicable settlement or approach the appropriate forum for resolution of your dispute.
13. The aforesaid communication to the plaintiff clearly shows that Executive Director could not conclude the matter and he advised the plaintiff to approach appropriate forum for resolution of his dispute. The language of the letter unequivocally shows that neither this letter can be treated as an order nor any rights of the parties were decided but an advise was given to the plaintiff to seek appropriate remedy in the appropriate forum which makes it clear that in fact there was no order in field which might be appealable to the appellate bench of the Commission. At the best, this can be treated as an “administrative directions” given by the Executive Director under his delegated powers which is not appealable in view of the conditions laid down under proviso attached with sub-section (1) of Section 33 of the Securities and Exchange Commission of Pakistan Act, 1997. It is also pertinent to point out that the Executive Director granted no relief to the plaintiff, neither any show-cause notice was issued to the defendant No.1 nor any order was passed. The plaintiff has attached a copy of order dated 12th August, 2009 passed by Securities and Exchange Commission of Pakistan against the defendant No.1 in an identical matter and directions were issued to pay the compensation to the complainant Ms. Nasreen with the payment of differential amount of Net Assets Value (NAV). May be this is a reason that the plaintiff has also sought directions against the defendant No.4 to initiate appropriate proceedings against the defendant No.1 and take strict penal action against the defendant No.1, its Chief Executive, Directors, officers etc. in accordance with law.
14. The word "Order" has been defined under the Black's Law Dictionary and Judicial Dictionary by K.J. Alyar 13th Edition as under:
Black's Law Dictionary
"Order. A mandate; precept; command or direction authoritatively given; rule or regulation. Brady v. Interstate Commerce Commission, D.C.W. Va., 43 F.2d 847, 850. direction of a Court or Judge made or entered in writing, and not included in a judgment, which determines some point or directs some step in the proceedings."
Judicial Dictionary by K.J. AIYAR 13th Edition
"`Order' as a noun, has been held equivalent to or synonymous with `decision' [see 26 CJS, 767, Note 72; `regulation', `rule', `resolution', `shipment' and `warrant', as has been compared with, distinguished from, `regulation' and `warrant]
Reference can be made to 2011 PLC (C.S.) 203, Deedar Hussain Jakhrani versus Federation of Pakistan.
15. In my own judgment reported in 2010 Y L R 3313, “Sabir Hussain versus Board of Trustees Karachi”. It was held that plaint cannot be rejected in piecemeal. This is a settled principle of law that in case of controversial questions of facts or law the provision of Order 7, Rule 11, C.P.C. cannot be invoked rather the proper course for the Court in such cases is to frame issue on such question and decide the same on merits in the light of evidence. While rejecting the plaint, contents of the plaint would be read as a whole and presumption of correctness would be attached to averments made therein. Plaint in suit could not be rejected in part. It is further pertinent to mention that Jurisdiction of civil court can be excluded by the Legislature by special Acts which deal with the special subject but the statutory provision must expressly provide for such exclusion or must necessarily and inevitably lead to such inference.
16. As I said earlier that there was no order in field, therefore, mere advisory directions issued by the Executive Director cannot be considered as an order of the Commission or the authorized officer. The learned counsel for the defendant No.1 failed to plead any specific bar in which no civil suit can be filed for the redress of grievance shown by the plaintiff in this suit except reliance of section 33 which in my view and understanding of law is not applicable in the present controversy. Section 9 of Civil Procedure Code clearly provides that civil courts have jurisdiction to try all suits of civil nature excepting suits of which their cognizance is either expressly or impliedly barred. Wherever there is a right, there is a remedy which is a well known maxim ‘ubi jus ibi remedium’. Section 9 C.P.C granted general jurisdiction to try all suits of civil nature and jurisdiction of a court is to be determined initially by recitals in the plaint and since there is no specific bar under Securities and Exchange Commission of Pakistan Act, 1997, therefore, in all fairness, the suit is maintainable. I am fortified by the judgment in the case of Abbasia Cooperative Bank (supra) in which it was held that civil courts are competent under Section 9 of C.P.C. to try all suits of civil nature. Provisions contained in statute ousting jurisdiction of courts of general jurisdiction should be construed very strictly and unless case fell within letter and spirit of barring section, no effect should be given thereto.
17. The learned counsel for the defendant No.1 referred to the judgment of honourable Supreme Court in the case of Securities and Exchange Commission of Pakistan (supra). Controversy involved in that case was totally different than the case in hand. In that case SECP was itself petitioner and the matter related to the crisis of stock market. Initial order passed by SECP was directly challenged in the High Court in a writ petition, therefore, honorable Supreme Court held that under Section 33 of the Act of 1997, an appeal shall lie to an appellate bench of the commission in respect of an order of the Commission made by the Commissioner. The next case law relied upon pertains to NAB which is reported in PLD 2001 Karachi 256 in which controversy was related to freezing of property which has no direct application to the facts and circumstances of the present case. Case of Adnan Afzal (supra) relates to Section 5 and Section 20 of West Pakistan Family Court Act which gives exclusive jurisdiction to the Family Court which is hardly applicable to the facts and circumstances of this case. Facts and circumstances of case of Fouzia Begum (supra) are also distinguishable, in which core issue was that SECP being a regulatory body already ceased of the matter, but in the present case Executive Director of SECP itself directed the plaintiff to seek appropriate relief. Facts and circumstances of case of Zahida Sattar (supra) are also distinguishable in which question was involved whether civil court can try a criminal charge which is exclusively triable by criminal court under special law. Remaining two cases of M. Waqar Monnoo and Qayyum Nawaz Khan (supra) are also distinguishable and do not provide any help to support or strengthen the arguments of learned counsel for the defendant No.1.
18. As a result of above discussion, I do not find any substance in the application moved under Order 7 Rule 11 C.P.C for rejection of plaint or in alternate return of plaint under Order 7 Rule 10 C.P.C.
19. Now I would like to take up the application filed by the plaintiff under Order 39 Rule 1 & 2, CPC (C.M.A NO.10987/2009), in which it is prayed that the defendant No.1 to 3 be directed to deposit balance redemption amount with the Nazir of this court. The learned counsel for the plaintiff argued that the plaintiff submitted his request for redemption on 22.10.2008. This was followed by correspondence between the parties with the result that the Defendant No.1 was to redeem 50% units first, followed by remaining 50% within two weeks thereof. However, the Defendant No.1 failed to redeem the amount at NAV (Net Assets Value) prevailing at the end of October, 2008 which came to Rs.2,42,33,917. He further argued that after filing the suit, the Defendant No.1 paid Rs.1,57,47,799 in court and claim of outstanding amount of redemption on actual date is Rs.84,86,118/-. It was further averred that keeping in view the extremely dismal performance of the Defendant No.1, as evident from Annex-RJ-2 to Affidavit in Rejoinder filed by the plaintiff, the defendant No.1 be directed to deposit a sum of Rs.84,86,118 with Nazir of the court to secure the interest of the parties. In support of his arguments to the injunction application, the learned counsel referred to following case law:-
1. PLD 1983 Karachi 303 (Mst. Salma Jawaid v. S.M. Arshad). In this case, it was held that if the facts and circumstances of the case are not covered by Order XXXIX, C. P. C. and a receiver will not be appointed if the case does not fall within Order XL of Code of Civil Procedure. However, where there are compelling reasons and interest of justice require or demand the courts are neither helpless nor are they fettered by the specific provisions of Order XXXIX or Order XL, C.P.C. and in exercise of their inherent jurisdiction will certainly grant relief by way of temporary injunction or through appointment of a receiver to protect the rights of citizens. It is not possible and prudent to specify or identify the various situations or reasons where or when the Courts will exercise their inherent powers under section 94 or section 151, C.P.C. for granting a temporary injunction or appointing a receiver. In each case the court evaluates the overall situation considering the peculiar facts and circumstances on record and then the decision is taken whether in the interest of justice inherent powers are to be exercised or not. Each case has its own different set of facts and again and again new situations come before the Court and, therefore, it is not possible to lay down specific principles restricting the power of Courts to exercise their inherent jurisdiction in certain specified situations or for certain reasons only. If this were done, it would only impede the administration of justice and restrict the development of law.
2. PLD 1983 Karachi 527 (Ali Muhammad Brohi v. Haji Muhammad Hashim). In this case, it was held that term `interlocutory' applies to application made during pendency of action or to order or decree passed in action which does not finally dispose of rights of parties or which is made for progress of action e. g. order appointing receiver; granting temporary injunction, attachment before judgment of property of defendant, giving or refusing leave to assignee or successor to continue as the suit on assignment or devolution of interest or granting or refusing leave to defend suit
20. The Company Secretary of defendant No.1 filed counter affidavit in which it was stated that instant application is not maintainable as the redemption price of the units were calculated on the relevant dates after the deferment/suspension of the “redemption of the units” due to financial crises. Soon after termination of suspension of sale/purchase redemption of units, the defendant No.1 entertained the claim of plaintiff and after completion of the codal formalities offered to pay Rs.15,747,799.79 at the rate on the day i.e. 24.04.2009. Since the amount has been paid in this court hence the application is not maintainable. It was further averred that the plaintiff claimed the redemption of 466,343.087 Units since 22.10.2008. The request was regretted under Regulation No.57 of the Non-Banking Finance Companies and Notified Entities Regulations, 2008. The defendant deferred redemption of Units followed by suspension vide publication dated 12.01.2009 and same was intimated to concerned quarters. The Net Asset Value (NAV) of the Units is calculated/applied immediately from day when the request is entered into the software. It was further averred that none of the ingredients as required for grant of injunction application are available to the plaintiff as this is not a case in which the plaintiff has been able to show the prima facie case and/or irreparable injury/loss will be suffered and balance of inconvenience in his favour. Due to financial crises since mid of year 2008, numerous management companies/NBFC/Mutual Funds had suspended redemption keeping in view their own liquidity/financial set up. The dispute as raised does not lie within the jurisdiction of this court.
21. The learned counsel for the defendant No.1 & 2 mostly focused his arguments on rejection of plaint. So far as the injunction application is concerned, he argued that the plaintiff has failed to make out any prima facie case. No question of any irreparable loss or injury arises in the case especially when the plaintiff has also claimed damages/compensation and also sought directions against the defendant No.4 to initiate appropriate proceedings against the defendant No.1, its CEO, directors and officers. He further confirmed that the Defendant No.1 has already paid Rs.1,57,47,799 to the plaintiff during pendency of suit and argued that no case is made out for seeking any directions to deposit a sum of Rs.84,86,118/- in court by the defendant No.1 & 2 with the Nazir of this court.
22. The learned counsel for the defendant No.3 argued that the actual dispute is between the plaintiff and defendant No.1. He further argued that the plaintiff has no cause of action against the defendant No.3. it was further averred that mostly the allegations leveled in the plaint are only against the defendant No.1 to which the defendant No.3 has no concern. The learned counsel concluded his arguments that the plaintiff has no right to claim damages against the defendant No.3.
23. So far as injunction application is concerned, there is no dispute between the plaintiff and defendant No.1 regarding purchase of units by the plaintiff in Reliance Income Fund (RIF). It is also a fact that the plaintiff applied for redemption on 22.10.2008 but on 30th October, 2008, Company Secretary of defendant No.1 written a letter to the Personal Secretary of plaintiff in which he intimated that the defendant No.1 has come to know that the plaintiff has withdrawn his request for redemption of units and in lieu thereof, the defendant No.1 cancelled the request of redemption. Very next day again P.S. of plaintiff shown his astonishment and surprise to the defendant No.1 and in the nutshell it was communicated to the defendant No.1 that there was no question of any cancellation of redemption notice and again request was made to arrange funds for redemption of plaintiff’s units. Again vide letter dated 31st October, 2008 Company Secretary of defendant No.1 conveyed his thanks to the plaintiff for withdrawal of request of redemption of all units with assurance that defendant No.1 will redeem 50% of the plaintiff and shall redeem remaining units within two weeks time. The P.S. written a letter on 4th November, 2008 to the defendant No.1 in which he reminded two blank un-dated redemption forms for redemption within two weeks time and it was clearly stated that redemption value (NAV) will be 22nd October, 2008, on which date the plaintiff actually applied for redemption of all units. Various other documents are also attached with the plaint pertaining to the controversy and the payment of the plaintiff for redemption of units. It is also an admitted fact that during pendency of this suit, defendant No.1 paid a sum of Rs.15,747,799/- through cheques which payment is clearly reflected in the order passed by this court on 23.12.2009 and this amount was accepted by the plaintiff without prejudice to his rights and contentions. Order dated 23.12.2009 further shows that Mr. Aijaz Ahmed filed power for defendant No.3 and he argued that Reliance Income Fund (RIF) defendant No.2 is by definition is a Fund and does not have its own juristic entity, whereas the management of the Fund is with the defendant No.1 company to which counsel for the plaintiff Mr. Khalid Javed Khan undertook to file amended title of the plaint. On 12.1.2010, he filed amended title in which instead of deleting the name of Reliance Income Fund (RIF) defendant No.2, he deleted defendant No.3 Central Depositary Company of Pakistan Limited on whose behalf of Mr. Aijaz Ahmed filed his power. Perhaps there is some misunderstanding or some typing error and even otherwise there is no court order for deleting any of the defendants from the array of defendants except a voluntary statement of Mr. Khalid Javed Khan.
24. The learned counsel for the plaintiff argued that after making payment during pendency of the suit, still a sum of Rs.84,86,118/- is outstanding against the defendant No.1 on account of redemption of units on the basis of Net Assets Value (NAV) prevailing on 22.10.2008. The learned counsel for the defendant No.1 referred to a public notice attached with the written statement and argued that due to extra-ordinary circumstances in the financial markets and to safeguard interest of unit holders of the funds, the defendant No.1 announced temporary suspension of any redemption units w.e.f. 12th January, 2009 which decision was in accordance with the provisions contained in clause 8.2.1. and 8.2.2. of the Trust Deed and this notice was published in daily newspaper Business Recorded on 12.1.2009.
25. It is a matter of record that at the time when the plaintiff applied for redemption it was never pleaded by the defendant No.1 that redemption of units was temporarily suspended but notice of temporary suspension shows that the suspension took place much after the application of redemption submitted by the plaintiff. It is also a matter of record that no document has been placed by the defendant No.1 which may suffice to hold that after submitting application form for redemption of units, plaintiff ever resiled or withdrawn his request. In my tentative assessment and or tentative view, the plea taken by the defendant No.1 for non-redeeming or avoid the redemption is without any cogent or plausible reasons when under the relevant regulations it was obligatory and mandatory on the part of the defendant No.1 to ensure redemption within a period of six working days unless redemption has been suspended.
26. Though, the plaintiff relied upon Regulation 57 of the Non-Banking Finance Companies and Notified Entities Regulations, 2008, notified on 21th November 2008, but facts remains that the redemption of units were applied by the plaintiff on 22.10.2008 when the Non-Banking Finance Companies and Notified Entities Regulations, 2007 were applicable to NBFCs for carrying out leasing, investment finance services, housing finance services, asset management services, discounting services, investment advisory services and venture capital investment, including their business activities and to the notified entities being managed by such NBFCs unless specific regulations for such notified entities have been issued. The relevant Regulation No.66 of Non-Banking Finance Companies and Notified Entities Regulations, 2007 is reproduced as under:-
66. Pricing, issue and redemption of units.- (1) In case of an open-end scheme, if an initial offer is made, no investment of subscription money shall be made until the conclusion of the first issue of units at the initial price.
(2) Offer and redemption prices shall be calculated on the basis of the open-end scheme’s net asset value divided by the number of units issued and such prices may be adjusted by fees and charges, provided that the amount or method of calculating such fees and charges is clearly disclosed in the offering documents.
(3) There must be at least four regular dealing days per week subject to relaxation for a specific scheme as approved by the Commission.
(4) Any offer price, which the asset management company or the distribution company quotes or publishes, must be the maximum price payable on purchase and any redemption price must be the net price receivable on redemption.
(5) The maximum interval between the receipt of a properly documented request for redemption of units or certificates and the payment of the redemption money to the holder shall not exceed six working days unless redemption has been suspended.
(6) Where an open-end scheme deals at a declared price, and based on information available where such price exceeds or falls short of the current value of the underlying assets by more than five per cent, the asset management company shall defer dealing and calculate a new price as soon as possible.
(7) A permanent change in the method of dealing shall be made after expiry of one month’s notice to unit holders and with the approval of trustee.
(8) A temporary change shall only be made,-
(a) in exceptional circumstances, having regard to the interests of unit holders;
(b) if the possibility of a change and the circumstances in which it can be made have been fully disclosed in the offering documents; and
(c) with the approval of the trustee.
(9) Suspension of redemptions shall be provided for only in exceptional circumstances, having regard to the interests of unit holders.
(10) The asset management company shall immediately notify the Commission if redemption in units ceases or is suspended and the fact that redemption is suspended shall also be published immediately following such decision in the newspaper in which the scheme’s prices are normally published.
(11) Where redemption requests on any one dealing day exceed ten per cent of the total number of units in issue, redemption requests in excess of ten per cent may be deferred to the next dealing day.
(12) Under the circumstances specified in the offering document and for reasons to be recorded in writing the asset management company may suspend sale of units and shall immediately notify the Commission, the trustee and the general public of such decision.
N.B. There is no major difference in the language used under Regulation 57 (4) of the Regulations 2008 and Regulation 66 (5) of the Regulation 2007. In both regulations it is clearly provided that the payment of redemption money to the holder shall not exceed six working days unless redemption has been suspended.
27. In my another judgment reported in 2010 M L D 1267, Sayyid Yousuf Husain Shirzai versus Pakistan Defence Officers Housing Authority, the basic rules were discussed which are required to be considered while deciding injunction application such as (i) the prima facie existence of right in the plaintiff and its infringement by the defendant or the existence of a prima facie case in favour of the plaintiff; (ii) an irreparable loss, damages or injuries which may occur to the plaintiff, if the injunction is not granted; (iii) the inconvenience which the plaintiff will undergo from withholding the injunction will be comparatively greater than that which is likely to arise from granting it or in other words the balance of convenience should be in favour of the plaintiff. Existence of prima facie case is to be judged or made out on the basis of material/evidence on record at the time of hearing of injunction application and such evidence of material should be of the nature that by considering the same, court should or ought to be of the view that plaintiff applying for injunction was in all probability likely to succeed in the suit by having a decision in his favour. The term "prima facie case" is not specifically defined in the Code of Civil Procedure. The Judge-made-law or the consensus is that in order to satisfy about the existence of prima facie case, the pleadings must contain facts constituting the existence of right of the plaintiff and its infringement at the hands of the opposite party. Balance of convenience means that if an injunction is not granted and the suit is ultimately decided in favour of the plaintiff, the inconvenience caused to the plaintiff would be greater than that would be caused to the defendant, if the injunction is granted. Irreparable loss would mean and simply such loss, which is incapable of being calculated on the yardstick of money. An injunction is a writ framed according to the circumstances of the case commanding an act which the Court regards as essential to justice or restraining an act, which it esteems contrary to equity and good conscience. An injunction as is well known is an equitable remedy and accordingly is to conform to the well known maxim of the Law of Equity that "he who seeks equity must do equity". Equitable remedies are distinguished by their flexibility, their limitless varieties, their adaptability to the exigencies of case and the natural rules which govern their use.
28. The learned counsel for the plaintiff argued that the defendant No.1 is conducting itself in a manner which indicates that entire venture/investigation may sink which will cause an irreparable loss and injury to general investors including the plaintiff. He has also attached a sheet “Open Ends Fund’s Performance (as on 4th February 2010)” showing the performance of various income/money market funds in which Reliance Income Fund is appearing at serial No.10 and against its name cumulative return is shown (-) 16.51% while other funds mentioned in the same sheet are not shown in minus. The learned counsel further argued that the defendant No.1 is unworthy of being entrusted of public money and it is prepared to perpetrate the fraud to such an extent to avoid payment.
29. Keeping in view my own judgment referred to above and being further fortified by the judgment in the case of Salma Jawaid (supra), there is no hesitation in my mind to hold that where there are compelling reasons and interest of justice require or demand the courts are neither helpless nor are they fettered by the specific provisions of Order XXXIX or Order XL, C.P.C. and in exercise of their inherent jurisdiction will certainly grant relief by way of temporary injunction or through appointment of a receiver to protect the rights of citizens. It is not possible and prudent to specify or identify the various situations or reasons where or when the Courts will exercise their inherent powers under section 94 or section 151, C. P. C. for granting a temporary injunction or appointing a receiver. In each case the court evaluates the overall situation considering the peculiar facts and circumstances on record and then the decision is taken whether in the interest of justice inherent powers are to be exercised or not. Each case has its own different set of facts and again and again new situations come before the Court and, therefore, it is not possible to lay down specific principles restricting the power of Courts to exercise their inherent jurisdiction in certain specified situations or for certain reasons only. If this were done, it would only impede the administration of justice and restrict the development of law.
30. Under clause (e) of Section 94 C.P.C. in order to prevent ends of justice from being defeated, court may, if it is so prescribed, make an interlocutory order as may be appeared to the court to be just and convenient. Passing of an interim order is on the part of working of judicial system and no separate or specific provision is necessary to empower a court to issue an interim order. The power to grant interim relief vests in a court as a necessary corollary to the power to grant main relief. Not only under Order 39 Rules 1 & 2 C.P.C., injunction can also be granted under Section 94 and 151 C.P.C.
31. Since under the aforesaid regulations, defendant No.1 was under obligation and it was mandatory on his part to redeem the units within a period of six days. It is repeatedly stated in paragraph 16 & 18 of the pliant that redemption value of units was Rs. 24,233,917/-, on 22.10.2008 when the redemption was requested, whereas, vide letter dated 27.4.2009, defendant No.1 offered to pay for lesser amount of Rs. 15,747,799/-. In the written statement there is no denial regarding valuation of units mentioned by the plaintiff but in paragraph No.7, of the written statement, the defendant No.1 & 2 at one fell swoop, replied paragraphs 15 to 20 in which it is stated that redemption price of units calculated on the relevant dates after deferment/suspension of redemption of units due to financial crises and soon after termination of sale/purchase/redemption, units were entered as claim of the plaintiff in software and after completion of codal formalities, he was offered Rs. 15,747,799/- at the rate on the date i.e. 24.4.2009 which admission makes it clear beyond any shadow of doubt that the defendant No.1 calculated Net Assets Value (NAV) of the units prevailing as on 24.4.2009 and not 22.10.2008.
32. It is profusely comprehensible in view of regulation referred to above that redemption request was to be honored within six days. If NBFC will operate their affairs in such a way and fail to comply with the specific regulations to honor and redeem the units within a specific period of time, there will be serious chaos and turmoil and the confidence reposed by the public at large on the financial institutions/Non banking Finance Companies will be shattered, their rights will be seriously prejudiced and their money will be on stake. Once redemption request is made, it is the responsibility of NBFC to honor the same without any delay or excuse. It does not sound good and logical that a person who purchased units from NBFC on the hopes that he will have reasonable profit and returns/growth in his investment or funds, has to face serious hardship and problems to get back his own money on actual Net Assets Value (NAV) prevailing on the date of lodging his request, but he has to wait for a long time for the redemption at the will and leisure of the NBFC, which is totally against the spirit of regulations promulgated by the Securities and Exchange Commission of Pakistan Act, 1997 which in fact notified the regulations to safeguard and protect the rights and interests of unit holders.
33. Since there is no denial on the part of defendant No.1 that the plaintiff had not purchased the units or not tendered the request of redemption on 22.10.2008. Further at this juncture nothing was brought on the record by the defendant No.1 that after tendering redemption request, the plaintiff subsequently withdrawn his request or any suspension was in force when the request of redemption was made. The pros and cons lead me to an irresistible conclusion that the plaintiff has made out prima facie case as redemption was not made in view of relevant regulation mentioned above. The balance of convenience also lies in his favour as being a NBFC, it was responsibility and obligation of the defendant No.1 to honor the request of client/customer or unit holder within the stipulated period under the regulations unless any suspension is operated which was not done in this case when the redemption was applied. So far as question of irreparable loss is concerned, the SECP has already given directions to the plaintiff on 25.8.2009 to approach appropriate forum for which this suit has been filed and they failed to take any action against the defendant No.1. If the market condition goes further down or the fund is collapsed, the plaintiff shall suffer irreparable loss and injury, therefore, in order to protect and secure the rights of the plaintiff and further, it would advance the cause of justice to call upon the defendant No.1 during pendency of this lis as an interim measure/arrangement to deposit the balance/differential amount of redemption of units either in cash or furnish security/solvent surety. It will not cause any inconvenience or disadvantage to the defendant No.1 if the amount is deposited with the Nazir of this court and invested in some government profitable scheme or surety/security furnished and or retained in safe custody of Nazir till disposal of this suit.
34. Non appeared for the defendant No.4 (SECP) for the reason that plaint against them was struck of by the Additional Registrar on 10.5.2011.
35. As a result of above discussion, C.M.A No. 78/2010 moved under Order 7 Rule 11 CP.C is dismissed and injunction application CMA No. 10987 of 2009 is disposed of with the directions to the defendant No.1 to deposit Rs.84,86,118/- cash with the Nazir of this court within twenty days time or in alternate, the defendant No.1 may furnish solvent surety/security and or bank guarantee in the like amount to the satisfaction of Nazir of this Court. If above amount is deposited in cash, the same shall be invested by Nazir in some Government profitable scheme. The release/payment of this amount will be subject to final decision of this suit.
36. CM.A No 10054/2010 moved under Section 151 C.P.C has served its purpose whereby, the learned counsel for the defendant No.1 & 2 applied for an opportunity of further arguments. The request was allowed vide order 8.10.2010. This application is disposed of accordingly.